final exam questions essay

| June 14, 2016

Question
1. (TCO A, C) Anne acted as Jingo’s agent for maintaining Jingo’s rare coin collection, including the sale and purchase of rare coins for many years. Anne developed a drug habit in the recent past. She then sold some of Jingo’s coins and kept some of the money for herself to buy drugs. Soon thereafter, Anne was declared bankrupt. The state then notified Anne that she had sold the maximum allowable value of coins in a year without getting a rare coin dealer’s license. Shortly thereafter, Jingo died, which no one knew about until many weeks later. Discuss the effect of these events on the existence of the agency.

2. (TCO B, D) Kimberly created a computer accessory manufacturing and sales business. She never planned to have a business. But she made a certain accessory that her friends thought was interesting, and she made some for them. She found that people were willing to pay her, and then she started selling through.homeworkminutes.com/answer/view/71901#”>a website. She has never formed any type of business entity. Now that Kimberly wants to sell these accessories in England, she thinks she might need to look into the choice of entity. Discuss Kimberly’s options for her business in the United States, and how she might operate in England.

3. (TCO E, H) Bobby Brush agreed to paint Harry Resident’s house for $5,000. Bobby never planned to actually paint the house, but made a habit of entering into contracts, taking partial or complete payment in advance, and never doing the work. Bobby got his friend, Beth, to talk to Harry about how competent and honest Bobby was, and explain that Harry should not be concerned about the quality of work or paying Bobby in advance. Harry wrote Bobby a $3,000 check one week before the painting was to be started. Bobby transferred the check to Allison in exchange for Allison’s car, which was worth $2,800. Before Allison had a chance to deposit the check, there were several news stories about Bobby and all the fraud he had been committing. Allison then transferred the check to Beth, who then transferred it to Cathy. Beth gave Allison value for the check, and Cathy gave Beth value. Explain the applicability of the shelter principle in this situation.

4. (TCO F, G) Lucy is trying on clothes in the dressing room of Federal Department Store. Lucy goes home, but leaves her purse in the dressing room. A Federal employee, Beth, finds the purse in the dressing room and gives it to the storeowner. Assuming Lucy never returns to claim the purse, who gets possession of the purse and its contents, assuming the purse is (a) lost, (b) mislaid, or (c) abandoned?

5. (TCO C, D, G) Billy purchased a home the contract for which contained a clause that said, “This sale does not include any personal property or fixtures.” Billy noticed the provision when he signed the contract to purchase the house but did not worry about it because he had heard that fixtures were always included in a sale of real estate. When Billy moved in he was surprised to find that the refrigerator, a bathroom vanity, and the hardwood floor from the living room had been removed. In addition, two trees had been removed from the back yard. Discuss Billy’s legal rights.

6. (TCO D, H) Mark is a CPA in a large city who audited the financial statements of a firm that sold specialized computer equipment around the world. This was a complex audit, and Mark prepared numerous working papers in connection with the audit. Mark also had numerous conversations with client personnel in his efforts to understand the complex transactions and accounts. Mark’s client has recently become the subject of an investigation for numerous violations of law. Charges will soon be filed at both the state and federal level. Can Mark be called to testify, and can Mark’s work papers be subject to a subpoena?

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